Finding Strength in Numbers

Article
Jul 1, 2006

The ability to recognize a weakness is a strength itself. Six years ago, when Tom and Celeste Bockenstedt, co-owners of B&H Builders in Iowa City, Iowa, realized their accounting procedures needed help, they hired an outside firm to get their numbers in order. Doing this has not only assured the custom builder a consistent, healthy profit, it has allowed them to branch out and develop land like they always wanted to.

“Building on single lots is the way to go when starting out. But developments give clients peace of mind, knowing what type of home will be built next door. It allows the architecture to flow from one home to another to maintain a unified but separate look,” Tom Bockenstedt says.

Business has taken off since turning the focus to accounting. “We looked at what our margin should be, and at first we thought those numbers were unattainable, but now we’re hitting those goals,” he says.

The Bockenstedts are more willing now to open the books to lending institutions. Banks are more likely to give B&H Builders the loan, especially when most competitors don’t open their books, he adds.

“We feel more comfortable that our estimates are correct. We can focus more on client needs, and not be worried about where we’re at money-wise. We have confidence on the spot to tell them their upgrade is $30,000, not $20,000. Then they can make a decision which way to go, and we don’t take a hit,” Bockenstedt says.

Besides financial numbers, B&H also keeps the numbers of square feet in check by not overbuilding homes. “Clients want the best of everything, but they get sticker shock as a result. So we try to right-size their homes to give them enough space to be happy, but not too much to be unusable or too expensive. We ask them to measure their existing rooms, tell us which are too big or small, and we adjust from there,” Bockenstedt says.

B&H knows that framing materials come in 2-ft. increments, so it value-engineers its homes by keeping room dimensions divisible by two. “For example, if a room ends up being 12 ft. 4 in., we’ll knock it down to 12 ft. “Not everything we design and build is by 2-ft. increments, but we at least let clients know about this so they get the best value for their dollar,” he says. “I like to see clients with money at the end to put in granite when they thought they’d never be able to afford it. They can get it by managing costs to create a surplus.”